Budget 2018: What this means for individuals and small business owners

The annual Budget is undoubtedly one of the biggest dates in the political calendar, however, this year, it was a Budget overshadowed by the spectre of Brexit. Tasked with devising a financial plan to steer the country through uncertain times, Chancellor Philip Hammond took to the podium for the last time before the UK leaves the European Union.

With Brexit negotiations clouded with uncertainty, the Budget was based on an ‘average type free trade deal’ being agreed, however, Hammond warned that should the UK be unable to negotiate such a deal to exit the EU then a new statement may be need to be drawn up to deal with the potential fallout.

Following Theresa May’s promise at the Conservative Party conference last month that there would be an end to the austerity measures which have been in place since 2010, it was up to Hammond to flesh this statement out and elaborate on what exactly this means in real-world terms for public spending from April next year along with an explanation of how this would be funded.

Here is some of what he promised to deliver to the “strivers, the grafters and the carers who are the backbone of our communities and our economy”:

Public Services

Reiterated commitment made in June to provide a £8.4bn package to the NHS which he described as a £25bn increase in money allocated to the service. He promised more details will follow but revealed that this is to include a £2bn injection going directly towards improving mental health services including a 24 hr mental health crisis hotline.

Provision of extra money to assist with the cost of social care. An immediate £650m will be available to English councils to help them cope with the mounting pressures they are currently under

An extra £1bn to the Ministry of Defence to fund a variety of projects including continuous at-sea deterrence. An additional £160m will be allocated to counter-terrorism efforts with promises than police spending power will be reviewed by the end of the year.

For Businesses

For small businesses hiring apprentices, a £695m initiative means the cost to businesses will be halved.

Voiced his commitment to Entrepreneurs’ Relief following calls for this scheme to be abolished. However, minimum qualifying period has been increased from 1 year to 2 years.

The rules on IR35 will be extended to the private sector from April 2020. This will only apply to large and medium-sized businesses.

Pledge to clamp down on digital businesses avoiding tax by introducing a UK Digital Services Tax. This tax is aimed at “tech giants not tech start-ups,” with Hammond claiming this will raise £400m. From April 2020 the tax will affect only those businesses generating in excess of a £500m global revenue.

For businesses whose property has a rateable value of less than £50,000 their rates will be slashed by a third. Hammond also promised re-adjustments at the next revaluation in 2021 in an effort to revitalise the high street.

Cost of living

Motorists benefit from a ninth consecutive year of a freeze to fuel duty. This comes at a cost of £800m to the Exchequer yet provides motorists with a much needed financial boost, saving the average driver £1,000 a year. In more news of interest to motorists, an immediate £420m will be made available this financial year to tackle pot holes across the country.

Duty on beer, cider, and spirits has also been frozen; however, wine will not be afforded the same treatment and will increase in line with the RPI. Tobacco rises in line with inflation plus 2% along with increased tax on online gambling. The maximum stake on FOBTs will be reduced to £2.

Following pressure from both the opposition and some fellow Tory MPs, Hammond announced that more money would be found to protect those who would otherwise face a financial hit from the roll out of the controversial Universal Credit scheme although he did continue to extol the benefits of the scheme as a whole. Funding totalling £1bn will be made available over five years to help ease the transition and make the system fairer. Work allowance will also be increased by £1,000 (the amount someone can earn before they lose the benefit) – this will cost a total of £1.7bn

Confirming the Conservative manifesto commitment to rising the personal allowance to £12,500 and the higher rate to £50,000 by 2020 will be met one year early and will come into effect in April 2019.

Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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